CESC - Q4FY20 Result Update - ICICI Securities

CESC reported a decent operational performance in Q4FY20. Revenues were in line with estimates while lower other expenses led to a beat in EBITDA. However, a shortfall in other income negated the EBITDA beat. Consequently, PAT was marginally lower than estimates. However, on the subsidiaries front, the performance of all generation and distribution subsidiaries has significantly improved across all verticals.

Valuation & Outlook

Lack of growth triggers in the near term will keep consolidated revenues and PAT CAGR at 3.3% and 1.5%, respectively, in FY20-FY2E. The key trigger for re-rating would be finalisation of long/medium term PPA for unit 1 of Dhariwal Infra and better AT&C losses control at distribution companies. With minimal capex, going ahead, we expect the company to pay out higher dividends to shareholders. Valuations at 6.3x FY22E EPS are inexpensive. However, the company lacks any growth trigger in the medium term, which can meaningfully rerate the stock. We downgrade the stock from BUY to HOLD with a target price of Rs. 700 per share (7x FY22E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_CESC_Q4FY20.pdf

Shares of CESC LTD. was last trading in BSE at Rs.641.75 as compared to the previous close of Rs. 621.6. The total number of shares traded during the day was 10223 in over 913 trades.

The stock hit an intraday high of Rs. 645 and intraday low of 620.6. The net turnover during the day was Rs. 6500951.

Source : Equity Bulls

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